Exploitation vs Exploration and the JTBD

At this year’s Peter Drucker Forum Alexander Osterwalder illustrated the exploitation-exploration gap: Most companies feel fit in exploiting existing business models, that is managing minor innovation activities, creating evolutionary product developments or delivering better services. But for long-term success and growth these initiatives are not sufficient. Companies also need to expand their horizons, tap into completely new markets or invest into emerging technologies. But less than 10% of companies commit themselves sufficiently to explorative innovation (read more). Explorative innovation – or radical innovation or revolutionary innovation, how it is often called in innovation literature – is generally seen as more risky, more resource-intensive and more long-termed than incremental innovation. It is often claimed that radical innovation needs to be managed totally different with a try-and-error approach and a high failure tolerance, since it is more a game of chance than a manageable business process.

In our opinion, the differentiation between incremental vs. radical, exploitative vs. explorative innovation is an inherent company-centric point of view. From customers perspective it is irrelevant whether the innovation is new to a company or to a market or if it is even a groundbreaking invention. What matters to customers, is if an innovation helps them get a job done better, and/or get more job steps done on one platform. And consequently, if we put the Job-to-be-Done in the center of our innovation efforts, the innovation process doesn’t differ for incremental and radical innovation.

The innovation process that implements the Jobs-to-be-Done perspective in a company is called Outcome-Driven Innovation®. It begins with the identification of outcomes customers use to measure success when trying to get their job done. Since the desired outcomes refer to the Job-to-be-Done they are stable over time and free from solutions or product features. The desired outcomes are then quantified through a large-scale survey to identify the level of satisfaction and importance for each single outcome. This reveals the real need structure of a market and identifies opportunities for innovation. Only at the end of the Outcome-Driven Innovation process® there’s a process step called “strategic validation” where the identified needs are matched with existing solutions, the innovation strategy and the companies’ capabilities. Then a company has to decide if the innovation opportunity will be addressed by new product or service features, by new products and/or services or if a completely new delivery platform has to be developed.

When the time comes to transfer the strategy into concrete concepts for new features, products/services or delivery platforms it often makes sense to involve techniques and methods that trigger innovation ideas with a high innovation level. Like medical technology company B.Braun did when innovating its venous catheters. After conducting the Outcome-Driven Innovation Process® the project team knew exactly the most underserved needs of nurses and physicians when getting the job of “administering medication by a venous access” done. 

Out of these insights and aligned with their general innovation strategy they identified five strategic value themes an innovation should target. To trigger innovativeness in its ideation and concept development workshops, B.Braun invited lead users from medical industry but also from completely different industries (= analogue Lead users) like makeup-artists to help them finding better solutions. The analogue lead users faced similar problems in a different context and already had developed solutions that fertilized B.Braun’s ideation session. To look at the same problem from a different context situation is a very good method to help the development team thinking out of defined patterns and constraints. In this case, selected underserved customer needs in the defined value themes provided the guidance to identify the analogue lead users.

Depending on the nature of the innovation challenge, Outcome-Driven Innovation® can easily incorporate innovation methods and techniques to increase the explorative aspect of innovation, like lead user methodology, design thinking or business model canvas. But in all these cases, ODI is the higher-level process and defines the targets and specifications. Putting the Job-to-be-Done in the center of the innovation process makes innovation a controllable business process with an 86% success rate – even for innovation initiatives with a higher degree of innovation.

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